WASHINGTON  The Office of the Comptroller of the Currency has confirmed that Bank of America, Citibank, First Union Corp., and Fleet National Bank were the four national banks that it let hold stock in commercial companies  a move that sparked an angry reaction on Capitol Hill.

In response to a Freedom of Information Act request by American Banker, the Comptrollers Office revealed Friday that last summer it approved requests by the four banks to hold equities in public companies as a hedge against equity swaps and in other limited circumstances.

Banks that are involved in such transactions typically enter into equity swaps on behalf of customers who want to hedge against a change in the value of their stock holdings. To do so, banks are required to have an affiliate purchase an offsetting position.

The four banks argued that it would be more efficient and less expensive for them to purchase the stock directly, and they requested permission to do so in the case of customer-initiated swaps.

Fleet has not used its new powers, nor has it purchased any stock in connection withequity swaps, a company spokesman said Friday.

The decision was primarily related to market conditions, he said. For clients that we felt this would have been particularly applicable to, the market conditions turned in such a way that there was not a demand for the products during this period.

He declined to say whether Fleet plans to use the powers in the future.

First Union declined to comment whether it has conducted equity swaps, and representatives of Bank of America and Citibank did not respond to questions. Analysts predicted that they would stall their plans to use the new authority in light of a looming government investigation.

The General Accounting Office and the Treasury Departments independent counsel have been asked to investigate if the OCC skirted a legal ban against bank investments in commercial activities and hid its actions from Congress. The Justice Department has also expressed interest in pursuing the matter.

I suspect some institutions will be reluctant to invest in the structuring and marketing costs involved in developing an equity swaps business until this legal uncertainty is resolved, said Karen Shaw Petrou, managing partner of Federal Financial Analytics, the consulting firm formerly called ISD/Shaw.

Those costs, which vary tremendously by individual institution and their commitment to the business, include developing financial models and risk management systems, and establishing customers, she said.

Former House Banking Committee Chairman Jim Leach last month called for a federal investigation into whether the Comptrollers Office flouted federal law in a secret attempt to give national banks an advantage over their competitors.

The OCC maintained that while it had permitted the holding of equities in some unique cases, these approvals were not intended as precedents and were being misconstrued by lawmakers.

Rep. Leach, who was required by Republican term limits to relinquish his chairmanship last week, is expected to served on the newly renamed Financial Services Committee as a senior rank-and-file member. On Friday he vowed through a spokesman that he would pursue his concerns.

The Iowa congressman has not asked the banks involved to curtail any involvement in equity swaps, the spokesman said.

A spokeswoman for the new Financial Services chairman, Rep. Michael Oxley, said that he has not yet addressed the issue.

When a bank enters an equity swap arrangement requested by a customer for a legitimate business purpose, the bank can legally hold the underlying equity as a hedge. Comptroller of the Currency John D. Hawke Jr. has said that banks are already doing this through affiliates, but these transactions would be less costly and cumbersome if the banks held the stock directly.

A First Union spokeswoman said the powers granted by the agency are attractive. We view the new powers positively, she said. It is yet another tool that allows us to manage risk.

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